How can SME companies be successful in Tough Economies against big cooperation’s?

  1. Every problem and crises can be resolved

It is hard to get thru  all problems that are SMEs struggling  when the media keeps bombarding us with reports that many small businesses are going bankrupt. That kind of information can put owners of SME companies to depression about hall enterprise and business. Well, you can choose to wring your hands in frustration or you can look to the facts. For every small business failure, dozens more are actually thriving despite the economic panic.

What are these small businesses doing to outperform the economy? Consider the following strategic approaches:

  • Action-This is an entrepreneur’s best weapon. Things happen fast these days and fluidity favors small businesses — you don’t need to sort through the layers of bureaucracy that can slow down, or even cripple, larger companies. Small businesses can adapt to any circumstance quickly. As every thriving entrepreneur knows, speed breeds success.
  • Planning– It is important. Plans aren’t. It’s good to have a strategy in place, but don’t succumb to analysis paralysis. With things changing almost hourly, can you afford to spend time following a bloated plan that was outdated almost as soon as it was completed? Spend your time with your ear to the ground and respond accordingly.
  • Innovative financing.-There are a number of resources available to small businesses and innovative approaches that can have a positive impact on your bottom lin. God path is  up front pricing, using seller financing, and switching from fixed to variable costs, or selectively discounting items. Never the less, the discounting can damage your brand, the key word here is selective.

Give the people what they want. People are staying home more and they’re looking for value. Smart companies are tapping into that.

  • Test, measure, refine, repeat-Small businesses have another added advantage these days that they didn’t have in past recessions — social media and sophisticated online marketing tools. You can measure the success of your marketing and advertising and conduct all the market research you need in real-time with a click of the mouse. You can engage your customers online in a number of low-cost ways. And you can optimize your website so your customers can find you quickly and easily. Likewise, effective use of eCommerce capabilities can help keep you in the black with minimal overhead.\

2. Three Survival Lessons from Small Businesses

We hear daily reports of small businesses going bankrupt. But for every small business that goes belly up, there are dozens more that are thriving. Here are three lessons from them on how you can operate your business to survive even the deepest of downturns:

  • Agility-Small businesses have a great advantage in a fast-changing world: they adapt quickly. Without layers of bureaucracy slowing them down, small businesses can act fast to changing circumstances.
    • Rapid testing and refining-Social media and online marketing tools allow even the smallest of businesses to do real-time market testing. They can also engage customers and build a community around their business.
    • Planning again-Plans are often outdated as soon as they come out of the printer. Small businesses tend to focus more on planning and less on plans. They watch their surroundings And act accordingly.

As we can see PLANING is crucial for SME business, but also for any job, either in  profitable, non-profitable organizations…..small, big…PLAN is THE ULTIMATE LAW!

3. What Small Business Can Learn from Emerging Markets

by Rajeev Batra, Amitava Chattopadhyay, and Aysegul Ozsomer 

“Just how do you win against larger competitors who have more resources than you? A new wave of smaller companies from emerging market countries have discovered that you can not only win, but have the advantage over larger companies. It’s just a matter of deploying your resources — however limited they are — very strategic.

In researching our book, we studied 39 new companies, which we characterize as “Emerging Market Multinationals” (EMNCS), and found patterns in how these upstarts compete with larger companies. For example, larger competitors are likely to standardize their products and processes, manufacturing through contracted and distant facilities. As a smaller company, you can out-compete them by better tailoring your products to customer needs using your self-owned, lower-cost, and more flexible design and manufacturing resources. Take Taiwanese GPS manufacturer Mitac, which used this strategy to develop customized devices for each Asian market, serving their specific needs better than Garmin or Tom-Tom could.

From researching the book, we mainly found that as a small business, it’s especially critical to target how you deploy your (limited) resources. These have to be targeted in ways that maximize impact. Instead of a resource-sucking broad-front attack against its big Western competitors in the consumer packaged goods industry, India’s Godrej has picked just 3 product categories (hair color, soaps, insecticides), and 3 geographies (South Asia, the Middle East, North Africa), to compete in. Brazil’s Natura creates all its cosmetics from natural ingredients from the local Amazon rainforest, where it can source supplies better than anybody else.

Of course, there are other areas where you should pinpoint exactly where your efforts should go:

R&D: Just as Apple chooses to focus on consumer-delighting innovation with its relatively meager annual R&D spending (only 2.2% of sales, versus 15% by Microsoft), Haier targets its innovation into neglected segments: small refrigerators for dorm rooms and for wine cellars. India’s pharma-player Ranbaxy chooses to innovate in drug delivery mechanisms, not new molecules.

Marketing spending: Saudi Arabia’s Savola Afia and India’s Marico build their food and hair oil businesses through single mega-brands (Safola and Parachute respectively) rather than multiple brands. Mahindra tractors grows its US business by launching in just 2 US states, not all 50. India’s IT-provider WIPRO uses its $1.3 million marketing budget (versus IBM’s $150 million-plus) to reach its targeted Fortune-1000 CTOs in airport lounges in Narita, Kennedy, and Heathrow.

New customers: Where are they cheaper to acquire? Small-budget competitors find it hard to build high-profile brands, so customer segments that use functional selection criteria are easier targets. Lenovo thus goes after medium and large businesses before targeting the mass consumer market. Haier USA knows it can win trade customers more easily than end-consumers, so uses a ‘push’ rather than ‘pull’ go-to-market strategy.

New markets: Underserved, ‘special needs’ market segments also make sense to exploit, because they are often ignored by the larger incumbents — such as the landscaping firms and hobby farmers in the US and Australia targeted by Mahindra’s under-100 HP tractors. LG, entering the North American market for washing machines, targeted the high-growth but underserved front-loader segment, because it is easier to win over a customer newly-entering a growing category than it is to steal share in a stagnant one.

When resources are scarce, smaller competitors need to find new ways to lower resource-demands, throughout the value chain. Can you reduce costs by ‘verbalizing’ cost-elements traditionally considered ‘fixed investments,’ as India’s Airtel did with its mobile network infrastructure? Can you share R&D costs with university partners, as nature does, to generate 65% of its revenues from innovations launched in the past two years? Can you use the ‘earned media’ of public relations as much as HTC and Lenovo do, and the ‘co-branding quality rub-off’ from highly-respected brand alliance partners, as Haier and WIPRO do?

It’s also important to remember that most EMNCs need to work get stronger over time in their targeted domains. R&D, technology, innovation, and design capabilities that are missing but important need to be acquired or built-up, as did Apollo Tires, HTC, Tata Motors, and Mitac, in our sample. Others used targeted acquisitions for hard-to-access raw materials (Tata Beverages) and distribution channels (VitrA, with Villeroy & Boch). Higher-prestige brands, and local market knowledge, need to be developed or acquired too, for they lead to higher, more-sustainable profits (Ulker’s acquisition of Godiva). The talent hired into the organization too needs to be built-up over time, perhaps the most important challenge of all.

Despite the daunting resource limitations they suffer from, smaller firms can still perform well against much larger competitors. What it requires is a competitive strategy that is fully cognizant of these resource limitations, and finds clever ways to overcome the problems. “

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